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MARKET PLACE; Master Investor Lowers the Blinds

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Warren E. Buffett, chairman of Berkshire Hathaway Inc., who has gained a reputation over the years as a brilliant investor, has quietly moved to keep an important part of his investing activities secret.

The step could mean that Mr. Buffett, who before the 1987 crash said most stocks were overvalued, now sees values again, but he does not want to share them.

Because Berkshire Hathaway gained exceptions to the normal disclosure rules of state insurance departments and the Securities and Exchange Commission, some of its investments will now become public only when Mr. Buffett wishes them to. Setting Off Speculation

''They don't want everybody knowing their investment moves,'' said Robert Lange, general counsel of Nebraska's insurance department. Berkshire is based in Omaha. The limited disclosure filed by Berkshire this week shows that it has invested $181.9 million so far in an account whose contents will not be disclosed.

Mr. Buffett's decision to hide some trades is likely to set off speculation about what he is buying, but not from those looking for takeover plays. Berkshire Hathaway has never made a hostile takeover, or shown any inclination to be involved in one. But his reputation as a master investor may lead some investors to try to copy his trades, thus driving up the price while he is trying to add to his position.

Berkshire Hathaway owns a number of operating companies, including See's Candies, the Nebraska Furniture Mart, the Buffalo News, the World Book encyclopedia and several insurance concerns.

Because Berkshire has a large portfolio of investments, it is considered an institutional investor. As such, it must file quarterly reports on its holdings with the S.E.C. In addition, because it makes many investments through its insurance subsidiaries, it normally reports those transactions to state regulators.

The company has for years wanted to avoid disclosing its stakes. For the past five years its annual report has carried this statement by Mr. Buffett: ''Despite our policy of candor, we will discuss our activities in marketable securities only to the extent legally required. Good investment ideas are rare, valuable and subject to competitive appropriation just as good product or business acquisition ideas are.''

In pursuit of privacy, Berkshire for several years has filed its reports with the S.E.C. in a way that kept all or part of its investments out of the public record. That was done under a provision allowing investments to be kept secret if disclosing them would reveal investment strategies and ''cause substantial harm'' to the institution's competitive position. Searching Through Filings

Fewer than 10 of the more than 1,600 institutional investors seek such confidentiality, said Elizabeth Tsai, a special counsel in the S.E.C.'s investment management division.

Despite the S.E.C. exemption, Berkshire's stakes became public to those willing to search through the filings of its insurance companies. That was how analysts learned of Berkshire investments made earlier this year, including stakes in the Federal National Mortgage Association and Philip Morris.

But beginning with this year's second-quarter report, the National Indemnity Company, a Berkshire unit, began to use a confidential trust to avoid disclosing some holdings.

It was unclear why Berkshire had not used the provision before. J. Verne McKenzie, the company's chief financial officer, would not comment on the question. National Indemnity's second-quarter report showed $26.3 million in the secret account, an amount that soared to $181.9 million in the third quarter, the report for which was filed this week. From $17 to $2,687

When Mr. Buffett took over Berkshire Hathaway nearly a quarter of a century ago, it was a struggling apparel maker with a book value of less than $17 a share. By June of this year, thanks in part to big and well-timed investments in such companies as Geico, the Washington Post and Capital Cities/ABC, the book value, which reflects the market value of the publicly traded stocks its owns, had risen to $2,687 a share.

The company's own stock has done even better. It sold for less than $14 in 1965; yesterday it closed at $4,700 a share in over-the-counter trading. Since the end of 1987, it is up 59 percent, vastly outperforming most stocks. It is one of the few stocks trading above their 1987 pre-crash highs. Mr. Buffett and his family own 45 percent of the company's shares, a stake worth about $2.4 billion.

Mr. Buffett has consistently refused to allow Berkshire to split its stock, saying that such a move would attract short-term-oriented, and possibly foolish, investors. As a result, Berkshire is by far the highest-priced issue on any exchange. Later this month the shares will start trading on the New York Stock Exchange. A Focus on Value

Mr. Buffett was once assistant to Benjamin Graham, the late Columbia finance professor considered the founder of modern securities analysis. Mr. Buffett's approach to investing, and to business activities in general, is heavily oriented toward value.

One reason his insurance companies have performed so well, said Michael Morrissey, an analyst at Firemark Insurance Research, is that they have been willing to walk away from writing property and casualty policies when premiums were unreasonably low. When premium rates are high, though, their marketing is aggressive. At the moment, Mr. Morrissey said, rates are under pressure and the Berkshire companies are reducing their policy sales.

Mr. Morrissey is one of the few analysts to follow the stock, and while he called Mr. Buffett a ''genius,'' he said Berkshire stock was now priced well above the level that would interest Mr. Buffett if he were to look at the company as an outside investor. ''It's almost heretical to say that,'' he said. Mr. Morrissey believes that a ''halo, almost a celebrity cult effect'' surrounding Mr. Buffett, has helped push up the share price to almost twice book value. Worries on Auto Insurance

The newest Berkshire Hathaway filings show that the company has sold most of the 3.2 percent block it had accumulated in Twentieth Century Industries, a California auto insurer whose shares have suffered as a result of worries about the effect of Proposition 103, approved by California voters earlier this month, which mandated sharp cuts in auto insurance rates. Berkshire bought its stake for just over $18 a share and sold it for about $19. The price has since fallen to $16.125.

The filing also shows that at the end of September the company had invested nearly $100 million in Philip Morris shares, at an average price of around $89, a bit below the current level of $91. It made a profit of $10 million earlier this year trading the stock of the Federal National Mortgage Association, buying shares for an average of about $34.60 and selling around $39. The shares have since risen to $46.

A version of this article appears in print on November 17, 1988, on Page D00001 of the National edition with the headline: MARKET PLACE; Master Investor Lowers the Blinds. Order Reprints|Today's Paper|Subscribe